MEXICO CITY -- The government Tuesday formally indicted four top officials of two brokerage houses for grossly violating Mexican Stock Exchange laws and said 152 officials throughout 25 brokerage houses also have been found guilty of malpractices.
Rene Hernandez, a spokesman for the Attorney General's office, told United Press International that four brokerage house operators, including Eduardo Legorreta Chauvet, a top executive of Mexico's largest Operadora de Bolsa brokerage house, were detained Monday night.
Legorreta, who is the brother of top Mexican businessman Agustin F. Legorreta, also is considered to be a good friend of former President Miguel de la Madrid, whose six-year term ended Dec. 1.
'Four people are being indicted today (Tuesday) on charges of violating stock market laws. They are making their declarations now,' Hernadez said. 'It seems that they will have to go to the jail.'
Other officials formally indicted and detained on charges of violating laws include Jaime Cevallos Cervantes of the Operadora de Bolsa and Juan Carlos Fernandez Cueto and Jose Francisco Rodriguez Dupont of the Mexival Casa de Bolsa brokerage house.
Finance Minister Pedro Aspe late Monday requested the Attorney General's office to take action against the violators of the stock market laws.
Referring to law abuses during the stock market boom, and its subsequent crash in October, 1987, Aspe said investigations indicated that the stock market laws were flagrantly violated by some brokerage houses.
Aspe charged Operadora de Bolsa with fictitious transaction of Treasury notes, or Cetes, for its customers. He said the brokerage house also failed to register Cetes' transactions with the country's central bank, Banco de Mexico.
Investigations by the National Securities Commission, known as CNV by its Spanish initials, show that 152 officials throughout 25 brokerage houses have been found guilty of malpractices and could be banned from the Mexican Stock Exchange, one of the world's fastest growing stock markets.
The Finance and Public Credit Commission of the Chamber of Deputies, or lower house of Congress, has documented more than 800 cases of alleged fraud against brokerage houses since the stock market crash.
Scandals in stock trading began to surface last year when the Mexican Stock Exchange, known as Bolsa Mexican de Valores in Spanish, reported that between $6.5 million and $13 million traded on the stock market may be unaccounted for. In May, a Bolsa official attempted suicide, sparking rumors he may have been involved in the Bolsa scandal. But no concrete evidence has been produced so far.
Some analysts say people have lost confidence because of the scandals that have rocked some brokerage houses, in which investor money was stolen or was not pulled out of the market upon the investor's orders.
But everyone has concluded the heady days of 1986-87, when fortunes were made overnight, are gone forever.
The Mexican Stock Exchange, which gained 600 percent in real terms in one year only to plunge sharply in the 1987 worldwide crash, slowly bounced back in value, if not credibility, in 1988, becoming one of the world's fastest growing stock markets.
In 1988, the Mexican stock exchange gained 105,000 points, or 100 percent of its value in nominal terms. In real terms, the recovery was of 34 percent.
Medium and small-size investors, who suffered the most in the 1987 crash, remain skeptical about the Bolsa's future, despite last year's recovery.
The Mexican Stock Exchange boomed so high, to such widespread publicity in 1986 and early 1987, that many investors even sold their houses or borrowed money from banks to invest in the bull market, and lost nearly everything when the market crashed. Now, most of them are out of the market.
At the peak of 1987, about 250,000 investors invested in the Bolsa. Their number has now dropped to 200,000.
The Bolsa's capitalization rose from $1.1 billion at the end of 1982 to a record $23 billion in October of last year. Now, capitalization has fallen to $15 billion.
